Financial Performance Analysis of Kinkead Equipment Company Report

This report analyzes the market penetration strategies of Kinkead Equipment Company, comparing two templates (A and B) to determine the most appropriate method for evaluating financial performance. The analysis focuses on key metrics like market share, sales mix, sales price, and variable cost variance. The report applies the BCG matrix to the company's electric meters and electronic instruments, identifying their strategic positions as 'cash cow' and 'question mark,' respectively. It then evaluates the performance of each division, highlighting the aspects of performance important for each strategy and discussing relevant variances. Template A is chosen because it contains more financial information, allowing for a detailed analysis of profit variances. The report concludes with recommendations for improving market penetration and financial performance, emphasizing the importance of consumer satisfaction and adapting strategies to market dynamics.

RUNNING HEAD: MARKET PENETRATION 1
UNIVERSITY NAME
STUDENT NAME
STUDENT ID
COURSE
DATE.

MARKET PENETRATION 2
EXECUTIVE SUMMARY
The purpose of this report is to highlight the criteria of identifying the most appropriate method
of determining the most effective way of introducing the new product in the market.it involves
the determination of a market penetration strategy for a kinkead product.it entails the
computation of various elements such as market share, sales mix, sales price and variable cost
variance. As by the requirement of the activity, calculation, choosing the most appropriate
Template for analysing the market penetration and the key issues why the technique is chosen
are the vital aspects analysis in the report. The report further looks into the strategies applied by
the two templates i.e. Template A and Template B after analysing the BCG matrix of the two of
the Kinkead commodities.

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Table of Contents
INTRODUCTION...........................................................................................................................................4
MARKET SHARE, SALES MIX, SALES PRICE AND VARIABLE COST VARIANCE.......................4
STRATEGY TO BE APPLIED...................................................................................................................5
ASPECTS OF PERFORMANCE................................................................................................................6
EVALUATION OF PERFROMANCE.......................................................................................................6
CONCLUSION...........................................................................................................................................7
REFERENCES............................................................................................................................................9

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INTRODUCTION
This study It involves comparison of two techniques referred to as template A and B.Th. most
suitable template will be determined based on its responsiveness to various market forces. The
most suitable method of computation is then chosen based on several factors among them the
cheapest and the most efficient method of choosing the best and suitable method of market
penetration. Template A has been chosen for several reasons. Firstly, Template A contains
several relevant financial information involving EM and E1compared to Template B with less
financial data. Similarly, Template The information in A I.e. Price variable variance and
contribution unit may provide a better and detailed analysis of several profit variances.
Additionally, the computation of sales variance in Template A evaluates both the high and low
profits thus aiding in managers in decision making on whether or not to make and continue
trading in the commodity. After the analysis Template A is found to be the best suited to be used
in computations.
MARKET SHARE, SALES MIX, SALES PRICE AND VARIABLE COST VARIANCE
Sales mix can be defined as the proportion of a business’s commodities that are sold. It is vital as
the company's commodities are subject to change in their profitability. Market share refers to the
portion of the of the market dictated by a company or a commodity. It can also be put as the
industry percentage or cumulative sales generated by a certain company. On the other hand, the
sales price can be expressed as the price of commodities being offered at a discounted price.
Variable cost variance may be defined as the sum difference between the actual cost incurred and
the planned amount which might have been incurred. Template A is the most appropriate
analysis since the sales mix proportion of several products that constitutes the total sales of the
company .Template A consists of several financial information regarding EM and E1 compared
to Template Similarly the computation of sales mix of EM and E1 can assess the low and high
profit that will aid the management in making decisions on whether or not to proceed to trade
with the commodity .As by the information in template A the EM budgeted sale ratio is
76.2%(80000/105000)and that of E1 is 23.8%(25000/105000).EM did not attain the planned

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amount by 6628 units but E1 surpasses the the planned amount by 6628 units.EM produces a
hindering gain of 92,792 Sterling bond, thus A becomes more fit to ascertain the variance of
profits between EM and E1.
STRATEGY TO BE APPLIED.
For it to be weighed which strategy is applied, it is essential for the BCG matrix of the Kinkead
to be analysed. Prior to the analysis there are key factors to be considered. As earlier defined
mark et share refers to percentage of the industry total sales that is generated by a certain
company. On the other hand, market growth rates can be expressed as the expansion in size of
sales observed under a given consumer group within an explained period of time usually
determine by the management. In the analysis two vital considerations ought to be measured and
these are, the market shares and the growth rates (Farris, Bendle,Pfeifer & Reibstein, 2010).
Initially revealed Kinkead commodities are placed into two the EM and the E1. In EM the
planned market size is 80000 units but the actual market size is 65000, nevertheless, the
disagreement in market share remains at 10%, this shows a constant difference in the market
variations. Thus the unaltered market shares and lower market growth rate exhibits the cash cow
strategy of EM (Mayer, Melitz & Ottaviano, 2014) The market size of the budgeted amount in
E1 is 374,464 and the market share is 250,000 Sterling Pound. Compared with exact amount the
planned figure is lower. 241,321 is the market share variance and the unsuitable variance
declines to 8% from 10% this shows that the decreasing figure is wide by a margin of 2 %.,
hence the E1 is a question mark strategy as its technology is current and under experimentation
(Srinivasan & Hanssens, 2009) to understand whether the technology is fit, access its cost of
being in use and make the necessary improvements in the product to avoid it reaching the
declining state. In the declining state the sales of the commodity lowers despite the product
having the same quality it has in its initially stages of development, irrespective of continued
promotion and advertising by the company. For the company to avoid the product reaching the
declining state it is necessary to relaunch the product, improves its quality, and revise the
product' s marketing policies that include lowering the commodities price and ensuring its
availability in many markets near to the consumer' s premises. The company should come up
with the cycle of maturity of its product and establish the ways of improving and expanding the
market of its product through the analysis of various market variances and adoption of relevant

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ways of ensuring consumer satisfaction. Consumer satisfaction is the most determining value in
the products life cycle. If the the product doesn't promote consumer satisfaction, it is under the
threat of declining when introduced to the market.
ASPECTS OF PERFORMANCE.
EM strategy is cash cow. the achievement of it ought to be contained in two prospects. The first
prospect being that all Kinkead requires to concentrate on keeping the existing market share as
this would give them an option to sell their products as they seek to reach new consumer in the
market considering the prevailing changes in the market. The company must maintain the
unchanging growth rate and keeping the interest of the valuable consumers' resource, whereas
looking for a constant and recent opportunities to improve their commodity keeping the interest
of the consumers is vital as they are the one for the existence and performance of the company.
The question mark strategy is used by E1 as its commodity is under examination. Two moves
can be made by the company which will widely multiplies the market growth rate that obliges
enough market survey and scrutinization, however before taking this decision to be valid the
company must have carried out several examinations and experiments in detailed to take the
decision otherwise this will be a grave tactical mistake that may cost the company the existing
market share as well as reaching the potential new market. Multiplying the market share is
accompanied by competitive advantage of the commodity. Besides this, the company can
exclude the commodity as it has a lower competitive advantage. For strategy EM and E1, the
difference shows this progress is the market share and the share rate differences. Distuingshment
in budgeted and real market share can highlights market share task. Low growth rate is
associated to the contribution variances, thus the low growth rate is associated to price unit
variance (Loose & Szolnoki, 2012). Hence the comparison in budgeted and real amounts can
show these prospects of progress.
EVALUATION OF PERFROMANCE
EM strategy is the cash cow while the E1 strategy is the question mark. The further progress of
Em is to apply the relevant strategy aims at aiding the company to reach the commercial targets
effectively and efficiently (Zugno, Morales, Pinson & Madsen, 2013), are the two surveyors that
came up with the study that aims the company to achieve the commercial targets. Practically, the

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benefit of EM is that potential of achieving the unchanging market and growth rate as the
commodity is under the maturity stage. As a result of rigid market share the low rate of growth
renders competition thus making it possible to use less amount on promotion, this reduces the
company's expenditure on preparing presentations of promotion through several means of
promotion i.e. advertising in print media and and personal selling through employment of sales
person which is a costly means of advertising though appropriate as it has flexibility means and
personal appeal , (Middleton, Fyall, Morgan, Morgan & Ranchhod, 2009). The high progress of
cash cow strategy will try to find high profits, thought the enterprises on cash cow strategy needs
to establish a recent commodity to be involved in high-growth market economies. The drawback
of this progress of EM as a result of maturity is that the new commodity, the in comers ought to
commit widely for them to obtain the trade name awareness needed to attract a large market
share. The company should invest heavily on promotion to revive thedemand of the product in
itscmaturitu stage This includes relaunching the product, improving its quality through
development, increasing promotion activities to win the trust of the existing customers and
revising the marketing policies of the commodity. Progress of E1 operates under the
circumstance of question mark. The EM is widely sprouting hence uses vast amount of cash as a
result of low market they are not able to get back the cash instantly this is the stage at which the
company is selling at breakeven point, i.e. the point the sales covers the production expenditure
without generating profit. Due to this the commodity of E1 cannot qualify to be the market
leader, after which cash usage may degenerate into a dog if market rate decrease. E1 has the
benefit of having potential to earn market share and becomes a star with finally being a cash cow
if the demand growth gradually develops. Additionally, when the market strategy is favourable
and the commodity with good improvement, the E1 will attract wide opportunities to reach the
star, hence the progress of EM and E1 will rely upon the competitive advantage vested in the
commodity
CONCLUSION.
In conclusion, template A has been chosen since it comprises of various financial information
regarding EM and E1 as opposed to template B. similarly, the computation of sales mix of EM
and E1 can assess the low and high profits that will aid the management in decision making on
whether or not to proceed trading with the commodity. Additionally, as by template The

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budgeted sale ratio of EM is 76.29 (80000/105000) and E1 is 23.8%(25000/105000). It is clear
that E1 did not attained the planned amount by 6628 units and E1 surpasses the budgeted by
6628 units. Em thus contains the unfavourable profit of 92 792 Sterling Pound making the report
surveyors to make template A variance suitable for use.

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REFERENCES.
Farris, P. W., Bendle, N., Pfeifer, P., & Reibstein, D. (2010). Marketing metrics: The definitive
guide to measuring marketing performance. Pearson Education.
Loose, S. M., & Szolnoki, G. (2012). Market price differentials for food packaging
characteristics. Food Quality and Preference, 25(2), 171-182.
Mayer, T., Melitz, M. J., & Ottaviano, G. I. (2014). Market size, competition, and the product
mix of exporters. American Economic Review, 104(2), 495-536.
Middleton, V. T., Fyall, A., Morgan, M., Morgan, M., & Ranchhod, A. (2009). Marketing in
travel and tourism. Routledge.
Srinivasan, S., & Hanssens, D. M. (2009). Marketing and firm value: Metrics, methods, findings,
and future directions. Journal of Marketing research, 46(3), 293-312.
Zugno, M., Morales, J. M., Pinson, P., & Madsen, H. (2013). Pool strategy of a price-maker
wind power producer. IEEE Transactions on Power Systems, 28(3), 3440-3450.